Air India Sale: Why Nobody Seems To Want The Maharajah’s Thorny Throne


One of the major success stories of the government in the just concluded fiscal year 2017-18 was the disinvestment of Central Public Sector Enterprises (CPSE). At Rs 1,00,056.91 crore (including receipts through listing insurance firms), the Department of Investment and Public Asset Management (DIPAM) overshot the target of Rs 72,000 crore. Buoyed by this, the government has set itself a divestment target of Rs 80,000 crore in the current financial year beginning April 2018. The sale of state-run carrier Air India (AI) is one of the major bets the government is placing in its pursuit to meet this target.

However, the road to fruition for this deal is laden with thorns.

Two major potential bidders- Jet Airways and IndiGo voluntarily pulled out of contention in the last couple of weeks. IndiGo, which had officially expressed interest in the sale, was the first to jump the ship, saying that the low cost carrier (LCC) was “interest primarily in the acquisition of AI’s international operations and AI Express. However, that option is not available under the government’s current divestiture plans for AI.” The fact that the government has put up AI, AI Express and AI-SATS as one single entity for sale, is making the deal an unfeasible one for bidders. Even though Jet Airways did not explicitly divulge any reason for backing out, the official statement did mention “considering the terms of offer in the information memorandum and based on our review, we are not participating in the process.” Last week, news agency Reuters quoted sources to report that the Tata Group too, is unlikely to bid as it finds the terms of the sale set by government, ‘too onerous.’ Read More…

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